How do we calculate ROI after doing company sponsored training to employees?

CALCULATING THE RETURN ON INVESTMENT (ROI) IN TRAINING:

There is resistance to measure the ROI in training, and the following are some of the questions asked in the industry:

• How can I measure ROI to determine the value added to the organisation?

• What are the steps to measure ROI?

• How often should ROI be measured? 

• In which areas of learning and change in behaviour can ROI be measured?

• How do I implement the ROI process in the organisation?

• How do I attach a rand value to learning?

• What are the benefits of measuring ROI?

• How do managers overcome resistance to measuring ROI?

he good news is that ROI can be determined through a scientific method. ROI is the measure of the monetary benefits obtained by an organisation over a specified period in return for a given investment in a learning programme. In other words, it is the extent to which the benefits (outputs) of training exceed the costs (inputs).The cost of training is the money invested in the training programme. The benefits of the training programme would be the measurable output.

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ROI is a key financial metric of the value of training investments and costs. It is a ratio of net benefits to costs, expressed as a percentage.  The formula can be expressed as:

[(monetary benefits – cost of the training) / cost of the training] x 100

It is important to follow proper guidelines for the effective application of the ROI measurement process by adhering to the following steps: 

·         Create awareness for ROI in the organisation.

·         Build capacity for ROI by training staff to understand ROI.

·         Quantify information before the training in order to obtain a baseline (e.g. number of calls answered, number of customer complaints, etc.).

·         Covert this data to monetary value (e.g. the cost of answering a call).

·         Allocate resources for ROI.

·         Develop a culture of measurement and accountability among training staff.

·         Start with only one course as a pilot programme to practise ROI skills.

·         Communicate results to training staff and the whole organisation.

·         Design improvement plans for training programmes in order to increase ROI.

·         Once ROI results are available, use the data to market future learning programmes.

Outcomes, effectiveness and efficiency. Outcome — what will the company get from the training — should be the most obvious. Effectiveness measures the quality of said training. Efficiency on how the said training affects the employee behavior and their work.

I appreciate your answers guys, thank you.